Despite relatively lower prices, area under cotton cultivation would increase due to better yields and late recovery in the prices. However, politicizing of cotton cultivation is a matter which needs attention. It would not benefit the farmers, at least not in the long run. The state is supporting the farming community through open market buying operations, which might helps farmers to get better prices for their produce, however, it would make them dependent on the state. Instead of such type of populist measures government should provide them good hybrid seeds, and help them produce quality cotton.

"If we produce superior cotton we can earn foreign exchange. It will help trade in the long run. Government should set up a laboratory, certified seed should be given to farmers. It will make them self-sufficient. Inferior seeds are also a problem. Farmers could hardly get 30 per cent of total requirement of certified seeds,"stressed Arun Dalal.

Meanwhile, prices witnessed a good rebound. Sanker superior fetches Rs 21,500 per bale. Prices are seen increasing since last few weeks thanks to good demand and ease in the liquidity crunch. Mills and traders who were holding back their purchase in anticipation of further fall in the prices have started their buying operations, realising that drop in the sowing of long staple cotton may change the market mood. Substantial buying helped prices to recover from the five year's low. Demand in short and medium staple cotton is also good, however, price variation is very wide in Sanker, due to quality factor. Farmers are little worried lot as monsoon gets delayed. Normally the state receives rainfall in the middle of June, which is the chief factor for cotton as there is a substantial area which has yet to get irrigational facilities.

Global outlook

The global output is expected to fall in the current cotton year. China, a leading producer of cotton in the world has decided to cutshort its production. It will reduce the area under cotton cultivation, improve quality, lower cost and raise prices. In 1998, cotton was grown in about 4.44 million hectares in the country. China holds over 1.5 million tonne surplus cotton.

Cotton prices took a beating following last Tuesday's spec-hedge report issued by New York Cotton Exchange. The July future turned extremely bearish owing to aggressive selling. The future dipped to 54.25 cent per pound, a six-year low, as spec-hedge report prompted nervous selling. According to New York Cotton Exchanges report, hedgers hold large short positions of 44 per cent, while speculative short position was merely 5.55 per cent. Which indicates that most of the sale was delivery-based.